Residential Property is the UK's largest store of wealth. At around £5 trillion, it is worth more than UK equities and commercial property combined. The private rented sector (PRS) alone is estimated to have had a value of £929 billion at the end of 2014, more than the value of the country’s entire commercial property stock (£787 billion)*.
UK property market size and structure, 2014*
While UK investors have long had an interest in residential property, ownership of private rented housing is dominated by small private landlords. The proportion of institutionally–owned, expertly managed stock is unusually low in the UK compared with other developed markets globally.
One indicator of this is the composition of International property investment indices. At the end of 2015, residential property accounted for only 4.3% of MSCI’s largest UK property investment index, compared with a share of more than 10% across much of western Europe, over 20% in the US and upwards of 30% in Finland, Switzerland and the Netherlands**.
This is now changing. The PRS is seeing growing interest from UK and overseas institutions. They consider that decades of under-investment in this type of housing offer scope both to develop a new, large-scale investment sector and to improve the quality of the product.
Source: * The Size and Structure of the UK Property Market
, Investment Property Forum, July 2015; **MSCI and KTI (Finland) country indices, end 2015